I’ve written in the past about Avianca’s LifeMiles program, which is one of the best frequent flyer programs for redeeming premium cabin Star Alliance award tickets.
Not only do they have reasonable premium cabin redemption rates (especially in comparison to United’s devalued Star Alliance first class award chart), but they also frequently offer lucrative promotions for generating miles. Several times a year they’ll offer a 100% bonus on purchased or shared miles, which is a way to generate miles for 1.5 cents each (though they’ll be increasing the cost of purchased miles by 10% in September).
But one other thing that also makes the LifeMiles program cool is that they’ll let you purchase up to 60% of the miles needed for an award ticket at the time you book your award reservation. So for a 100,000 mile award you really only need 40,000 miles in your account when you go to book, and then can purchase the other 60,000 at the time of ticketing.
Up until last May this was super lucrative, because you could actually purchase 60% of the needed miles at the time of ticketing for as low as 1.275 cents each, which is even cheaper than the cost to purchase miles through a 100% promotion.
They changed the rates last May, however, and now the lowest cost at which you can purchase LifeMiles at the time of ticketing is 1.5 cents each.
What makes this interesting, however, is that the cost to purchase miles is non-linear, and varies between 1.5 and 3.0 cents per mile, depending on how many miles you purchase.
So to keep the math really easy, let’s look at an award that would cost 100,000 miles. In this case, a business class roundtrip between the US and South America.
Below is a chart with the amount you’d pay per mile if purchasing anywhere between 1,000 and 60,000 miles at the time of ticketing:
|# Of Miles Purchased||Cost||Cost Per Mile|
As you can see, what’s interesting is that the cost per purchased mile decreased from 3.0 cents per mile to 1.5 cents per mile as you go from 1,000 miles to 45,000 miles. Then it plateaus for a while, and then the cost per purchased mile goes up again, but only slightly.
I totally get why they decrease the cost per purchased mile the more you buy, but it’s interesting that the trend reverses when you max out the number of miles you can purchase.
So looking at the trend, it seems that the LifeMiles “sweet spot” is to purchase 45-53% of the miles needed at the time of ticketing, in order to pay the lowest rate of 1.5 cents per mile. Ultimately if you buy 54-60% of the miles needed at the time of ticketing you don’t come out way behind either, we’re only talking about a difference of 0.07 cents per mile at most.
Lastly, keep in mind that if you make a miles & cash booking and later refund it, you’ll be refunded the miles instead of the cash you paid. So making LifeMiles bookings using this method and later refunding them is potentially a way to get around the annual cap on purchased LifeMiles, since miles generated through this method don’t count towards that.
The ideal situation is to purchase 45-53% of the LifeMiles needed at the time of ticketing. However, if you need to purchase 54-60% of the miles needed you won’t come out that far behind either. The key is to avoid purchasing fewer than 45% of the miles needed, as the cost goes as high as 3.0 cents per mile.
(Tip of the hat to Eric)